SMT. KIRAN DEVI,NEW DELHI vs. ASSESSING OFFICER, NEW DELHI

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ITA 1802/DEL/2014Status: DisposedITAT Delhi28 April 2017AY 2009-105 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the omission of rental income for nine months was a bona fide mistake or human error, as the assessee promptly revised the return upon being notified. Therefore, no penalty under Section 271(1)(c) was sustainable.

What were the facts?

The assessee initially declared rental income for one quarter, but later revised the return to include rent for the remaining nine months after the AO pointed it out. The AO imposed a penalty under Section 271(1)(c) for the omitted income.

What were the issues?

Whether a penalty under Section 271(1)(c) can be imposed for a bona fide mistake or human error in not offering full income initially.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCHES : D : NEW DELHI

Before: SHRI R.S. SYAL & MS SUCHITRA KAMBLE

For Appellant: Shri T.R. Talwar, CA, Shri Umesh Chand Dubey, Sr. DR
Hearing: 26.04.2017Pronounced: 28.04.2017

PER R.S. SYAL, VP: This is an appeal filed by the assessee against the order passed by the CIT(A) on 06.12.2013 upholding the penalty of Rs.1,75,900/- imposed by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter called `the Act’) in relation to the assessment year 2009-10.

2.

Briefly stated, the facts of the case are that the assessee filed return declaring total income of Rs.11,78,807/-. During the course of assessment proceedings, it was noticed by the AO from the details of rental income filed by the assessee that rent @ 57,500/- per month from Shop No.13, Sector 28, Noida was shown for only one quarter. On query, as to why the remaining rent was not offered for taxation, the assessee revised computation of income adding rent for the remaining three quarters amounting to Rs.5,17,500/-. The assessment was, accordingly, completed. Thereafter, penalty was imposed u/s 271(1)(c) with reference to the amount of rent not originally offered for taxation. The ld. CIT(A) confirmed the penalty imposed by the Assessing Officer. The assessee is aggrieved against the confirmation of penalty.

3.

We have heard the rival submissions and perused the relevant material on record. The assessee furnished return declaring rental income for first quarter. Such rental income was offered on the basis of Form No.26AS which depicted rental income filed for these three months. The reason for not showing the remaining rental income for nine months was that the Income-tax Department attached rental income and, on the basis of the direction given by the Assessing Officer, such amount was directly obtained from the assessee’s bank account as adjustment of outstanding tax. Such amount was also not being reflected in Form No.26AS as the amount was directly recovered by the Income-tax Department. Rental income was included in the return on the basis of information available on the portal in Form no. 26AS. Neither the rental income for the remaining nine months nor the benefit of TDS thereon was taken by the assessee into consideration. These facts indicate that there was a bona fide mistake on the part of the assessee in not initially including the rental income for remaining nine months in her return of income because As soon as this fact was brought to the notice of the assessee, she swiftly revised the return offering the remaining amount for taxation. In our 3 considered opinion, it was a human error committed by the assessee which does not call for any imposition of penalty.

1.

The Hon'ble Supreme Court in Price Water House Coopers Pvt. Ltd. vs. CIT (2012) 348 ITR 306 (SC), has held that no penalty u/s 271(1)(c) can be imposed for a bona fide mistake or a normal human error. Respectfully following the ratio decidendi flowing out of this precedent, we are of the considered opinion that no penalty is sustainable in the facts of the present case. We, therefore, order to delete the penalty.

4.

In the result, the appeal is allowed.

Order Pronounced in the open Court on 28.04.2017.

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